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Little Impact Is Foreseen Over Change for Emissions

A move by Gov. David A. Paterson to increase the free allowances for carbon-dioxide emissions that New York gives power plants is unlikely to undermine efforts by nine other states that signed a landmark pact to reduce global warming, officials said on Friday.

Last fall, 10 states from Maryland to Maine agreed to cap the emissions from hundreds of power plants and to make them pay for polluting. Under this carbon-trading pact, known as the Regional Greenhouse Gas Initiative, each state issues its own tradable permits, or allowances, for each ton of carbon-dioxide pollution.

States auction most of the allowances, but many power producers have complained about being forced to pay for them.

Mr. Paterson’s willingness to increase free allowances angered environmentalists and surprised officials in the other states. They reacted by reaffirming their commitment to the current carbon-trading pact.

“We think it’s a New York issue, and we don’t see it having any impact in other states, including New Jersey’s program,” said Jeanne Herb, the policy director for New Jersey’s Department of Environmental Protection, in a widely echoed sentiment. “Nor do we envision that it will have any real impact on the auction prices.”

Officials in Massachusetts and Rhode Island said they expected little impact in their states.

In New York, Morgan Hook, a spokesman for the governor’s office, seemed to play down Mr. Paterson’s efforts to change the policy. “There has been no commitment to increase the free allowances yet,” Mr. Hook said. “The governor has made a commitment to look at the regulations if there is a need to look at the regulations.”

That could happen, he said, when the state’s Department of Environmental Conservation learns definitely how many power producers were eligible for free allowances from the last carbon auction, in December.

Two of Mr. Paterson’s top aides said in interviews on Thursday that the governor had promised to address the industry’s concerns, and that a preliminary review by the Department of Environmental Conservation had already indicated that the number of free allowances was not enough.

Mr. Hook also said that the next three auctions would not be affected even if the state decided to reopen its regulations because any change would face requirements including a period for public comment.

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Experts emphasized that even if New York made the change, the overall number of allowances in the program — the region’s total amount of carbon emissions allowed — is capped and therefore cannot rise. Many states, including New Jersey, have already made provisions to ease the cost burden on power plants that had made fixed arrangements to sell their power long before carbon-trading was in place, which is the source of New York’s problem.

Changing the rules for how carbon allowances are allocated may be more difficult in other states, many of which would have to consult their legislatures, rather than do it through the executive branch, as New York can.

Still, the carbon market was clearly rattled by the news. Trading of carbon allowances reached a record level on Friday, most likely because of the news about New York, said Evan Ard, a spokesman for Evolution Markets, a carbon markets broker. But Mr. Ard said prices — which are perpetually low — were not volatile.

The carbon-trading pact “has struggled with credibility from Day 1, given the starting overallocation of emissions allowances,” Alex Rau, of the carbon-trading firm Climate Wedge, said in an e-mail message.

“And behavior from the regulators like this will only undermine what little confidence there has been in the market,” Mr. Rau continued.

Donald McCloskey, the director of environmental strategy and policy at PSEG, a New Jersey-based energy company, said he would not seek more free allowances from New Jersey regulators.

Mr. McCloskey said New York’s potential move merely strengthened the case for a national carbon-trading program like the one the Obama administration hopes to introduce.

Under a national system, he said, “these interstate differences would be removed and largely reduced by having one carbon market, one set of rules that the whole nation operates under.”

Danny Hakim and Cornelia Dean contributed reporting.

A version of this article appears in print on , on Page A13 of the New York edition with the headline: Little Impact Is Foreseen Over New York’s Proposed Change for Emissions Allowances. Order Reprints|Today's Paper|Subscribe